CPCU-500 by The Institutes Actual Free Exam Q&As

Question 1

James must sell his house quickly to take advantage of a career opportunity and purchase a new house in another state. Which one of the following types of financial risk is James exposed to in this situation?

A. Interest rate risk B. Exchange rate risk C. Credit risk D. Liquidity risk

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Correct Answer: D Vote an answer

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Question 2

The commercial lines unit at ABC Insurance has been given several objectives as a result of senior management's strategic planning discussions. ABC wants to become a leader in professional liability insurance, offering not only specifically tailored insurance products, but also consulting services to assist insureds in reducing their professional liability loss exposures. The goal is to become recognized as a specialist insurer and to be able to charge appropriately higher rates for the coverage. This is an example of which one of the following business-level strategies?

A. Focused cost leadership B. Differentiated harvest strategy C. Differentiated cost leadership D. Focused differentiation

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Correct Answer: D Vote an answer

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Question 3

Which one of the following is one of the five forces driving competition that are described in the Five Forces Model?

A. Change in consumer preferences B. Training and competence of employees C. Threat of substitute products and services D. Management's tolerance for risk

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Correct Answer: C Vote an answer

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Question 4

No-Flame Company installs fire suppressant systems in newly constructed buildings. No-Flame has an occurrence version of the Commercial General Liability Coverage Form. The first day the owners occupied a new building, the fire suppressant system installed by No-Flame malfunctioned. The building owner sustained personal property damage, and the chemicals released by the system caused minor injuries to three of the building owner's employees. No-Flame publicly accused the building owner of setting the suppressant system off in order to collect the insurance proceeds, although No-Flame knew that its systems had defects. The owner sued No-Flame for damages. Which one of the following statements best describes how No-Flame's CGL insurer will respond to the lawsuit?

A. The insurer will cite the exclusion under Coverage A Bodily Injury and Property Damage Liability that is titled Expected or Intended Injury. B. The insurer will cite the exclusion under Coverage B Personal and Advertising Injury Liability related to injury arising out of oral or written publication of material done by the insured with knowledge of its falsity. C. The insurer will deny the entire lawsuit because the allegations involve both bodily injury and personal and advertising injury. D. The insurer will cite the exclusion under Coverage A Bodily Injury and Property Damage Liability that is titled Damage to Impaired Property or Property Not Physically Injured.

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Correct Answer: B Vote an answer

Question 5

Directors and Officers liability loss exposures arise out of directors' and officers' legal responsibilities and duties. Of the major responsibilities of corporate directors and officers listed below, which one of the following is the most important in analyzing D&O liability loss exposures? The duty to

A. Maintain the corporate charter and update the bylaws. B. Perpetuate a competent board through regular elections. C. Produce interim reports for shareholders. D. Act as a fiduciary in their relationship to the corporation and its shareholders.

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Correct Answer: D Vote an answer

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Question 6

Which one of the following statements is correct about the enterprise-wide risk management process?

A. The first step of the risk management process is to identify risk owners and their roles in the organization. B. The risk management process is typically established by the organization's senior management. C. The risk management process occurs within and is supported by the risk management framework. D. The primary focus of the risk management framework is to reduce negative risk.

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Correct Answer: C Vote an answer

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The Institutes Becoming a Leader in Risk Management and Insurance - CPCU-500 Exam Practice Test